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Sears is selling hundreds of stores. Investors cheer.

Sears is deploying its biggest weapon -- its vast real-estate holdings -- in an attempt to avoid a death spiral. So far investors love it.

The core business of Sears(SHLD) is crumbling. Sales have plunged, red ink is mounting and cash is going up in smoke. The once great retailer is a shell of its former self.

Things have gotten so bad that Sears plans to raise cash by selling hundreds of its prized stores to a newly formed real estate investment trust, or REIT. Sears said the move would generate "substantial proceeds" and "enhance our liquidity."

"We're just watching this slow-motion train wreck. The death of this once-venerable company," said Rosenblum.

That wreck only got worse in the past three months.

Net losses totaled as much as $630 million last quarter, building on a $497 million loss from the year earlier.

Cash on the balance sheet shrank to $330 million, compared with $839 million at the end of the second quarter.

"The core business remains horrible," said retail analyst Brian Sozzi, who is CEO of Belus Capital Advisors.

Sears pushed back against that characterization.

On an adjusted basis, Sears' third quarter losses are expected to be comparable to a year earlier, indicating that its "operating performance has stabilized," company spokesman Chris Brathwaite wrote in an email to CNNMoney.

"This represents a meaningful change in the trend of the business," he said, adding that Sears expects this "positive development" to continue into the fourth quarter.

Postponing the inevitable?

And shares of Sears skyrocketed to their best level since December as Wall Street cheered the REIT plan.

Sears said it may sell 200 to 300 stores -- likely some of its most valuable ones -- to a REIT. Sears, which cautioned such a move is not a done deal, would lease back the stores and continue operating them.

The retailer could then use the cash it generated from the sale to keep funding its business.

"This may just postpone the inevitable. Sooner or later they are going to get into this death spiral where they can't sell because vendors won't ship and vendors won't ship because they can't sell," said Rosenblum.